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Investing.com -- RBC Capital Markets analysts see a "compelling" buying opportunity in shares of SSE (LON:SSE), citing the company’s current valuation as undemanding and reflective of an overestimation of regulatory and execution risks.
In a note dated Thursday, RBC flagged that concerns surrounding SSE’s growth trajectory and political risk have weighed on its stock, but the firm believes these fears are overdone.
SSE, a leading UK energy company, has faced skepticism from investors due to uncertainties in regulatory policies and potential shifts in government support for renewable energy projects.
However, RBC analysts argue that the market is undervaluing SSE’s position in the transition to clean energy and its long-term investment plans in renewables and infrastructure.
They see the stock’s recent underperformance as an entry point for investors looking to capitalize on an improving risk-reward profile.
The analysts also pointed out that SSE’s plans remain intact, with a strong pipeline of projects that are expected to drive earnings growth in the coming years.
They said that while political risks exist, SSE’s diversified portfolio and operational strengths provide a cushion against potential regulatory headwinds.
Additionally, RBC believes that the valuation discount applied to SSE’s stock is unjustified given its growth prospects and strong execution track record.
With these factors in mind, RBC Capital Markets maintains a positive stance on SSE, stating that the stock’s current levels provide an attractive buying opportunity.
RBC suggests that downside risks are overstated, while SSE’s continued growth in the renewable energy sector offers substantial long-term potential.